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Door Open For HMRC Following RFC Judgement

In a judgement delivered in less than 10 minutes yesterday, the Supreme Court brought the curtain down on almost seven years of litigation in the tax case involving RFC 2012 plc (in liquidation), otherwise known as the Rangers Tax Case.

In finding for HMRC, the Supreme Court held that payments into a trust set up for, amongst others, players and senior executives of Rangers Football Club comprised earnings received at the time those payments were made and, as a result, PAYE and NICs were payable on them.

These payments should be treated as earnings even although the amounts were paid to a third party rather than the employees themselves. Although, technically, the trustees had a discretion not to make funds available by way of loan to the employees, this was irrelevant. The redirection of funds to the trust was done with the acquiescence of the relevant employee and the payment was inextricably linked to that employee’s performance of his services.

This decision upholds the conclusion reached by the Inner House of the Court of Session which overturned the previous decisions of both the First-Tier and Upper Tribunals.

This now opens the door to HMRC to pursue many similar arrangements both in football and beyond which were awaiting the outcome of this case.

In a judgement delivered in less than 10 minutes yesterday, the Supreme Court brought the curtain down on almost seven years of litigation in the tax case involving RFC 2012 plc (in liquidation), otherwise known as the Rangers Tax Case.

In finding for HMRC, the Supreme Court held that payments into a trust set up for, amongst others, players and senior executives of Rangers Football Club comprised earnings received at the time those payments were made and, as a result, PAYE and NICs were payable on them.

These payments should be treated as earnings even although the amounts were paid to a third party rather than the employees themselves. Although, technically, the trustees had a discretion not to make funds available by way of loan to the employees, this was irrelevant. The redirection of funds to the trust was done with the acquiescence of the relevant employee and the payment was inextricably linked to that employee’s performance of his services.

This decision upholds the conclusion reached by the Inner House of the Court of Session which overturned the previous decisions of both the First-Tier and Upper Tribunals.

This now opens the door to HMRC to pursue many similar arrangements both in football and beyond which were awaiting the outcome of this case.